'Just because airlines have eliminated change fees doesn't mean we're about to enter a new golden age of travel.'
While multiple airlines have bid adieu to flight change fees permanently, travelers shouldn't get their hopes up for fee-free flying in the near future.
United Airlines (UAL) announced over the weekend that it would no longer charge passengers traveling within the U.S. a fee to change their flights. A day later Delta Air Lines (DAL) and American Airlines (AAL) followed suit, saying they would eliminate the fees ( ), which cost travelers as much as $200 per ticket.
Alaska Airlines (ALK) has also announced (Southwest Airlines (LUV) never charged flight change fees to begin with.) that it will drop change fees permanently. Meanwhile,
Almost all airlines have waived flight-change fees () in some regard since the coronavirus pandemic became a major concern beginning in March.
However, airlines have chosen to make the change permanent as the industry continues to struggle amid the pandemic. While the number of people traveling by air has increased substantially from the COVID-19-fueled lows in April and May, it still remains well below the norm.
On Monday, over 711,000 passengers went through Transportation Security Administration checkpoints, the agency reported (), which was two-thirds less than the 2.2 million people who went through U.S. airports a year ago.
And with the peak summer travel season coming to an end, airlines are scrambling. "They're seeing the writing on the wall and saying, 'We could be facing some really empty flights this fall and winter,'" said Scott Keyes, founder and chief flight expert at travel website Scott's Cheap Flights.
Also see:Airlines are issuing billions of dollars in vouchers -- but can you still get a cash refund for coronavirus-related flight cancellations? ()
By permanently doing away with the change fees, airlines are attempting to give travelers some peace of mind as they consider whether to make flight reservations during this still-uncertain time. If it's still not advisable to travel come Thanksgiving or Christmas, travelers could simply switch to flights in 2021 without paying much more.
"It takes away so much of the stress of booking a trip you know might not happen," said Sara Rathner, credit cards and travel expert at personal-finance website NerdWallet. "Now, you can book a flight if you need to without feeling like you'll be punished if you have to reschedule."
But consumers still need to read the fine print, even as airlines eliminate these fees.
For starters, although consumers will no longer need to pay a fee if they change their flight reservation in some capacity with the airlines that have ushered in the new policy, they are still on the hook for any difference in fares. So if the new tickets cost more, you will be paying more.
And if the new tickets cost less or you decide not to travel after all, you likely won't be getting any sort of refund. "Free changes are not the same as free cancellations," Keyes said.
Many airlines have relaxed their rules regarding cancellations, allowing consumers to cancel their flights proactively. But passengers who do this in the vast majority of cases are being given vouchers for future travel rather than cash refunds. And those vouchers tend to come with expiration dates, meaning travelers must book new flights within a specified period of time or else they lose the money.
While flight change fees weren't necessarily the biggest driver of revenue for airlines, fees are still integral to their bottom lines.
"Airlines have built their entire business model on fees," said Christopher Elliott, chief advocacy officer at Elliot Advocacy, a nonprofit organization that supports consumers. "These are desperate airlines resorting to desperate measures."
In recent years, "unbundling" () has been the name of the game with most airlines as budget carriers like Spirit (SAVE) and Frontier became major competitors to stalwarts like Delta and United.
Budget airlines typically charge rock-bottom prices for tickets with no frills -- but passengers then pay more for "amenities" such as seat selection and checked bags. Those fares then appear extremely competitive on travel search engines like Kayak or Expedia (EXPE).
Read more:Airlines must take extreme precautions to keep passengers safe, experts tell Congress ()
Major airlines have copied this model, not only by offering "basic economy" tickets that replicate the budget-airline price point, but also by charging fees for extras like checked bags across the board.
"People say they hate the fees," Keyes said. "But what they really love more than low fees is low fares."
Given how critical fees are to airlines' business model today, travel experts say that the unfortunate reality for travelers is that the future likely holds more fees and not fewer.
"Just because airlines have eliminated change fees doesn't mean we're about to enter a new golden age of travel," Rathner said.
"Airlines will find a way to make up revenue because they need to stay in business," she added. "We've already seen them lay off employees and cut routes. We may also see increased fares, or new fees get tacked on or rolled into the base fare."
In particular, airlines could use the past as inspiration: After the terrorist attacks of Sept. 11, 2001, some carriers began charging an additional security fee, Rathner said. "We might see fees that help cover the cost of enhanced cleaning procedure," she said.
And once the pandemic is over, experts said that airlines could very well reintroduce flight-change fees as people begin to travel more.
The U.S. Global Jets ETF (JETS) that tracks the airline industry is down 44% year-to-date, while the Dow Jones Industrial Average and the S&P 500 are up 0.38% and 9.16% over that same time-frame.
-Jacob Passy; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
September 04, 2020 09:38 ET (13:38 GMT)
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